Wednesday, January 14, 2015

Reality Trumps Federal Reserve Rhetoric

An excerpt from my chapter, "The Fed: Reality Trumps Rhetoric" appears today as a daily article at I was honored to be asked to contribute the chapter to a new book, The Fed at One Hundred that provides a critical assessment of our nation's central money making machine. Edited by David Howden and Joseph T. Salerno, the book is an excellent work providing a scholarly evaluation of the Federal Reserve. In my chapter I explore main themes in the rhetoric used by Fed officials, drawing upon speeches from Federal Reserve Chairmen and official Fed publications since its inception. I then hold this rhetoric up to the light of the monetary and economic history of the United States and show that despite claims to be the savior of the global economy,
The history of the Fed has been one of monetary inflation, higher overall prices, diminished purchasing power, economic depressions, and lost decades. In 1913 the state sowed the inflationist wind and for a hundred years we have been reaping the economic whirlwind.

Wednesday, January 7, 2015

Salerno on Rothbard's THE MYSTERY OF BANKING

Here is Joseph Salerno's nice introduction of Murray Rothbard's The Mystery of Banking.

I concur that The Mystery of Banking is an excellent introduction to monetary theory, how fractional reserve banking affects the quantity of money and its purchasing power, and the monetary history of the United States. In fact, if you come to Grove City College to study economics, you will use it as the main text in our Money and Banking course.

Thursday, January 1, 2015


My review of Randall Holcombe's new Advanced Introduction to Austrian Economics has just been published by Libertarian Papers. Holcombe's concise work makes for an excellent way to introduce any friends (or enemies for that matter) who are schooled in the neoclassical economic framework to the more rich, realistic, and therefore relevant economic analysis in the Austrian tradition.

Sunday, November 30, 2014

Dalrymple on the Illusion of European Austerity

This past spring, David Howden, upon looking at European fiscal policy, asked the very reasonable question, "Where's the Austerity?" The answer being nowhere except in the minds of the politicians and the intellectual class that supports them.

Now along comes Theodore Dalyrmple, my favorite conservative commentator, warning of the misuse of the "loaded word" austerity. In so doing he uses an excellent household analogy:
Suppose that, for a number of years, my spending had been larger than my income, so that I had accumulated a large debt. Suppose also that I had nothing to show for my excess expenditure, which has all gone to increase my level of current consumption. Interest payments on my debt now exceed my outlays on such items as food, clothing, and shelter. The bank to whom I owe the money tells me that things cannot continue like this.

I agree that things cannot go on in the same way, and, as a token of my seriousness, I promise that henceforth, I shall not drink my nightly bottle of Meursault but only half a bottle of Chablis. This will reduce my excess expenditure from, say, 6 percent of my annual income to 4 percent. I call this sacrifice of Meursault for Chablis “austerity.” Would anyone take me seriously?
Austerity indeed!

Thursday, October 16, 2014

Salerno on the Latest Winner of the Economics Nobel Prize

Praise from across the journalistic and economics worlds have been heaped upon the awarding of this years Nobel Prize in economics to Jean Tirole, a French game theorist who has specialized in finding market failure in large businesses, especially if they are vertically integrated.

In the Financial Post, economist Joseph Salerno says "Au contraire." He notes:
Tirole was awarded the Nobel Prize for concocting complex technical solutions to what Austrian School economists have long known and taught to be pseudo-problems for a dynamic market economy driven by rivalrous competition among entrepreneurs eager to earn profits by anticipating and serving ever-changing consumer demands.

Friday, October 10, 2014

EPA's Power Plant Rule Is Too Draconian

. . .And will do much more harm than good. That was the primary message of a panel I was a part of who sat down with some of the editors of the Harrisburg Patriot-News on Wednesday.

You can read about our meeting in the paper's very fair write-up, "Pa. industry leaders take aim at EPA's power plant rule: Six takeaways"

As the piece notes, "John Pippy of the coal alliance and Dave Taylor of the manufacturers' group visited the PennLive editorial board Wednesday, with Shawn Ritenour, professor of economics at Grove City College, to voice their concerns with EPA's plan."

The EPA wants to reduce CO2 emissions from coal-fired electricity plants by 30 percent by 2030. Doing so requires draconian measures that are not even possible with current technology.

Our main points were as follows:
  • What the EPA wants power plants to do is unrealistic and unachievable and will kill off coal plants.
  • Renewable energy can't replace the power supplies that will be lost if EPA's rule takes effect.
  • The EPA is not giving due credit for reductions in carbon pollution made since 2005.
  • The EPA regulations provide little if any benefit to the environment for way too many bucks. And that does not even consider the moral issue surrounding the encroachment of private property
  • A tax on carbon pollution is not a good alternative, either. I made the point that, among other weaknesses, any carbon tax would be arbitrary and, therefore, unsuited to accomplishing what its proponents want it to.
You can read the entire piece by clicking here.

Sunday, September 28, 2014

Christian Professors Weigh in on Markets, Justice, and Exploitation

On September 5, Christianity Today published an article by Dr. Kevin Brown, seeking to examine the relationship between capitalism and the common good. Brown is assistant professor at the Howard Dayton School of Business at Asbury University and in his essay he chastises the Institute for Faith Work and Economics' video, I Smartphone as a too simplistic, pro-capitalist work that tempts us to "deify the market."The Institute subsequently asked six professors from various disciplines to comment on the question whether markets, within a biblical framework, lessen exploitation. I was one of the professors asked to share my thoughts and they are included in this blog post.

Obviously, a single blog post is not nearly enough to do justice to the question, however some points are clear enough. I wrote:
The market is a network of voluntary exchange. Nothing more, nothing less. It is not the arbiter of truth and beauty, but it is a marvelous institution nonetheless, because the market price system allows for the coordination of a vast, complex market division of labor that increases the productivity, income, wealth, and standard of living of everyone who participates.

This even includes those employed in harsh working environments at what most Americans would think of as unacceptably low pay. We should note, however, that what most people see as labor exploitation is, in fact, people choosing work under such conditions because it is their best alternative.

Of course Christ calls us to be responsible market participants. However, responsibility includes not harming others in the name of good intentions. We do not help the most vulnerable of our society by taking away their best alternatives.

I encourage you to read the entire post that features insights from five economists and an associate professor of New Testament studies.